外文报告：MAS Group-Macro Matters-120713

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See the last page of this report for important disclosures
GL OBAL E CONOMI CS
Macro Matters
China’s growth: Up, down or
sideways
In this issue of Macro Matters, we address the issue of China’s
growth path. In contrast to the market, we have held the view
that Chinese growth (YoY) will bottom in the second quarter.
But after reviewing the data and leading indicators, while
growth YoY may have bottomed in the second quarter, a
range of published data and anecdotal snippets suggest to me
that it is possible the level of activity in China will not bottom
until the third quarter. Clearly policy stimulus will intensify and
lift activity but there will be lags.
On the other hand, Our China Economist, Joy Yang, believes
that the second quarter is likely to be the worst of the year
and Chinese GDP growth of 8% in 2012 is still achievable. We
lay out our differing views on the timing of China’s upturn and
include the views of our analysts for the banking, property,
commodities, consumer and utilities sectors.
The highly seasonal nature of Chinese economic activity may
play a key role in our differing views. Chinese activity levels
increase steadily through the year, with the first quarter
being the weakest quarter while the second (11% above Q1
on average) and third quarters (3.5% above Q2 on average)
increase modestly. The fourth quarter is the strongest
quarter by a wide margin (on average 30% higher than the
third quarter in nominal terms).
In sum, Joy thinks in terms of the YoY growth rate, 3Q
should see a rebound to 8% from 7.6% in 2Q—partly helped
by the low base effect. From my perch, I am not convinced
that sequential activity will accelerate much, if at all, based
on the leading indicators and sentiment surveys.
1. The case for Bill’s assertion ? ‘We’ve not passed the
bottom of the activity (perhaps growth) cycle yet’
In this section, we provide eight charts to make our point. These include
the leading indicator series for economic activity compiled by the OECD
and China’s National Bureau of Statistics (available through May), the
PBoC’s quarterly Industrial Enterprise and Bank Climate Surveys
(available for the second quarter), the consumer confidence survey
(available through May) and China’s export growth versus the Global
PMI new orders series. None of these suggest an imminent upturn in
economic activity. In fact I would suggest that they highlight the
downside risks to our current forecast.

The leading indicators don’t point to stability no
matter which series (OECD or China’s) you use
95
96
97
98
99
100
101
102
103
104
Jan-1998 Jan-2001 Jan-2004 Jan-2007 Jan-2010
OECD - Europe China
India OECD - Total
Index
OECD Normalized Leading Indicators

Source: OECD, Bloomberg, Mirae Asset Research

Not only are domestic orders sluggish but export
orders are falling against a backdrop of ….
-40
-20
0
20
40
60
80
Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
35
40
45
50
55
60
65
70
75
80
Total
Nonoil
Global PMI new export orders (RHS)
China: Export Growth
YoY, 3mma Index

Source: Bloomberg, CEIC, Mirae Asset Research
… an industrial sector with excess inventories
35
40
45
50
55
60
Jun-92 Jun-95 Jun-98 Jun-01 Jun-04 Jun-07 Jun-10
CN: 5000 Entrepreneur Survey Diffusion Index: Inventory
Level
Index Industrial Enterprise Survey
2001 2008

Source: Bloomberg, CEIC, Mirae Asset Research

13 July 2012
Bill Belchere, Global Chief Economist, 852 3653 8612, bill.belchere@miraeasset.hk
Joy Yang, Chief Economist for Greater China, 852 3653 8620, joy.yang@miraeasset.hk
Stanley Li, China Financial Analyst, 852 3653 8619, stanley.li@miraeasset.hk
Stephanie Lau, China Real Estate Analyst, 852 3653 8609 http: //wendang.chazidian.comu@miraeasset.hk
Henry Liu, Head of Commodity Research, 852 3653 8606 henry.liu@miraeasset.hk
Maxwell Yang, China Research Associate, 852 3653 8608 maxwell.yang@miraeasset.hk
Ricky Ng, CFA, Regional Head of Utilities 852 3653 8634 ricky.ng@miraeasset.hk